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Community foundations, nonprofit lenders blending strengths

Through our partnership with Issue Media, this story is in several publications around the state.

Community foundations have found a satisfying way to invest in their communities. They’re investing in nonprofit lenders, who in turn invest in small businesses.

Elissa Sangalli is president of Northern Initiatives
Elissa Sangalli

“It’s a great model,” said Elissa Sangalli, President of Northern Initiatives, a Community Development Financial Institution that provides loans and business services throughout Michigan. “Community foundations have the funds and we have the ability to deploy the funds to help small businesses.”

The partnerships between foundations and nonprofit lenders allow both to focus on their strengths, said Janelle Mair, Vice President of Community Investment at the Community Foundation for Muskegon County.

“We stay within our area of core competency – strategic grantmaking and investment supports – while supporting small businesses through the CDFI’s skills – supports for businesses that can’t access traditional capital,” she said.

Northern Initiatives used funds from the foundation’s 2023 investment to help Mari Romero buy a “forever home” for the bakery she has nurtured for 10 years. Yummy Delights by the Lakeshore opened this summer on Hackley Avenue, where Romero is already creating generational wealth. Her daughter Sabrina runs her own cookie business out of Yummy Delights – and both are flour-ishing.

The foundation’s investment is also providing pre- and post-loan support for scores more entrepreneurs with Northern Initiatives’ newly hired West Michigan-based business coach. More than half of them are entrepreneurs of color.

David DJ Jones is CEO of the Petoskey-Harbor Springs Area Community Foundation
DJ Jones

Investing in a nonprofit that supports small businesses has allowed the Petoskey-Harbor Springs Area Community Foundation to “move one investment from Wall Street to Main Street,” said David (DJ) Jones, Executive Director.

One startup, literally on a main street, backs him up. When demand for Harbor Equipment’s tractor rentals surged, thanks to all that yardwork during the pandemic, Lucas Fitzpatrick and Ric Newbury quickly realized their home-based business far exceeded the space they had at home. Funds from the Petoskey-Harbor Springs Area Community Foundation’s investment helped with a new location, payroll and operating expenses through the first year.

“The foundation has once again built up the resiliency of a local business,” said Sangalli. “To be able to help a local small business and use local money to do it is at the heart of our mission.”

Jones is a big proponent of the Program Related Investment (PRI) concept, a tool relatively new to the foundation.  The foundation’s initial investment of $150,000 in 2019 has resulted in $98,000 in Emmet County loans, including Paycheck Protection Program (PPP) loans that have since been forgiven.

“Our  investment is multiplying and we’re recycling it,” Jones said. “Get a small return, give it away again. In this process, we’re building a stronger community, a stronger economy.”

The “program related” part of the investment is vital too, said Janelle Mair. “Community Foundations are a wealth of knowledge on the needs and opportunities in local communities. The place-based focus allows for a deeper understanding of where and how investments can be most impactful; and how donors can work together to create change in a community.”

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